Summary
A recent discussion highlights the emergence of a new class of wealthy Americans termed "everywhere millionaires," who have amassed significant wealth through private businesses often overlooked in the broader economic narrative. Authors Owen Zidar and Eric Zwick, both economists with extensive backgrounds in tax policy, reveal that these individuals, numbering over three million, typically own businesses in sectors like dental practices and HVAC services. Their wealth is largely derived from pass-through entities, which allow profits to flow directly to owners' personal tax returns, benefiting from a tax code that has increasingly favored such structures.
Zidar and Zwick argue that while the rise of billionaires garners significant media attention, the wealth accumulated by everywhere millionaires is substantial, often surpassing that of the richest 400 Americans combined. They emphasize that many of these millionaires have built their fortunes through hard work and perseverance in less glamorous industries, challenging the notion that wealth is solely concentrated among the ultra-wealthy. The authors also explore the implications of tax policies that disproportionately benefit this group, suggesting that while these policies encourage entrepreneurship, they may also contribute to widening income inequality.
The conversation also delves into the barriers to entry for new entrepreneurs, particularly in industries with entrenched local monopolies, and how these barriers can stifle competition. Zidar and Zwick advocate for policy reforms that could level the playing field, such as addressing regulatory protections that favor established businesses and revising tax codes to ensure fairness across different income types. They conclude with a cautiously optimistic view of the American dream, suggesting that while challenges remain, opportunities for aspiring entrepreneurs still exist, especially as the older generation of business owners begins to retire.
Show Notes
Ed Elson is joined by Owen Zidar and Eric Zwick to unpack their research on the “Everywhere Millionaire”. They explain how pass-through businesses work, why the tax code disproportionately benefits their owners, and how policymakers could close some of these loopholes. They also explore how AI is changing entrepreneurship in America and what it all means for the future of the American dream.
Owen Zidar is a Professor of Economics and Public Affairs at Princeton University. Eric Zwick is the Joel F. Gemunder Professor of Economics and Finance at the University of Chicago Booth School of Business. Their book, The Everywhere Millionaire: Who Is Really Rich in America and How They Got There, is available now.
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